German factory orders plunged in September
following a dramatic 12.1-per-cent monthly contraction in demand from
the country's key eurozone partners, data released Friday showed, according to dpa.
The Ministry of Economics in Berlin said new industrial orders
plummeted by a bigger-than-forecast 4.3 per cent in September from
August to record their third consecutive monthly fall. Analysts had
predicted a small 0.1-per-cent fall in September.
"The financial turmoil and the economic slowdown in other eurozone
countries have obviously spoiled the appetite for goods 'made in
Germany'," said ING Bank economist Carsten Brzeski. "The German
industry has finally caught the crisis virus."
The September decline meant that factory orders have slumped by
3.6 per cent during the third quarter from the previous quarter
Orders sunk 1.4 per cent in August.
Underlying the scale of the slowdown underway across the 17-member
eurozone, a key survey released Friday showed private sector activity
in the currency bloc contracting at its fastest pace in 28 months in
The London-based economic research group Markit said its composite
purchasing managers' index (PMI) for the eurozone fell to 46.5 last
month from 49.1 in September as the debt crisis undercut the economic
mood across the region.
This is lower than Markit's preliminary estimate of 47.2. A
reading below 50 indicates contraction in economic activity.
"The final PMI was even weaker than the earlier flash estimate,
and suggests that the euro area contracted at a worrying pace at the
start of the final quarter," said Markit chief economist Chris
Year on year, orders slowed to post a modest gain of 2.4 per cent
in September from growing by 4 per cent in August.
Releasing the data, the ministry pointed to the low demand for
major items such as ships, railway equipment and aircraft as well as
the calendar effects of the summer holiday season as contributing to
the fall in orders.
But it went on to say: "Companies currently appear reluctant to
act." The ministry added that it expects industrial production to
slow during the fourth quarter.
The release of the latest order book data followed the surprise
announcement by the European Central Bank on Thursday that it was
cutting borrowing costs by 25 basis points to 1.25 per cent.
This came with a warning from the ECB's new president, Mario
Draghi, that the eurozone faced a mild recession in the runup to the
end of the year.
While total foreign orders fell by 5.4 per cent month-on-month in
September, domestic orders dropped by 3 per cent.
The September drop in orders from Germany's main trading partners
in the eurozone followed a 5 per cent contraction in August.
Orders from non-eurozone states slipped by 0.3 per cent. This
includes demand from the 10 members of the European Union that have
not joined the European Union along with major world economies such
as the US, China and Japan.